Today’s News & Commentary — December 17, 2015
The $1.1 trillion Omnibus bill has been released. Unions and manufacturers secured a two-year delay of the Cadillac Tax, and Democrats were successful in defeating several riders targeting Obama’s workplace agenda. In particular, Democrats prevented the riders that would have blocked enforcement of the Department of Labor’s fiduciary rule and the NLRB’s new joint employer standard. As Politico notes, in January the NLRB will resume proceedings against McDonald’s concerning the company’s possible joint liability for franchisees’ alleged retaliation against fast food protesters in 2012.
The Federal Reserve has raised interest rates for the first time in nearly a decade. The Washington Post explains how the hike will affect consumers: higher borrowing costs on mortgages and auto loans, increased rates on credit cards, and weaker stock market gains are likely, although not guaranteed. The rate increase may also lead to better yields on savings accounts.
At Vox, Matthew Yglesias argues against the rate increase, underscoring how it will reduce the pace of job and wage growth. In particular, reduced job growth is likely to have a disproportionate effect on marginalized workers. The African-American unemployment rate, for example, is twice the white unemployment rate. This 2-to-1 ratio appears to be fixed, so if white employment drops from 10% to 5% (a 5% point reduction), black employment will fall from 20% to 10% (a 10% point reduction). Because the unemployment rate currently stands at about 5%, “it’s easy for relatively privileged people to neglect the benefits of further small reductions. But for an African-American population that will enjoy a double-scale version of any drop in the unemployment rate, the stakes remain quite high.”
At the Washington Post, Lydia DePillis explains how corporations use choice of law provisions to protect their interests, often at the expense of employees. After the Supreme Court unanimously voted in 2013 to strengthen the enforceability of “choice of forum” clauses, it became easier for companies to add choice of law provisions to contracts with their employees. Employees, however, often have no idea how the fine print in the contract may negatively affect their wages and other interests in the future.
DePillis also covers a change in tax rules that has hurt servers. Most restaurants automatically add gratuity to large parties — or at least they did, until last year. That’s when the IRS adopted a new rule that counted mandatory charges as wages, making them subject to payroll taxes and a factor in overtime calculations. Because the new rule created hassle and expense that employers didn’t want to deal with it, many of them got rid of auto-gratuities altogether. Without the “safety net” of auto-gratuities for large parties, many servers are undertipped. As DePillis notes, the auto-gratuity is, of course, “just one piece of a larger debate” about the entire practice of tipping and the tipped minimum wage.
In international news, the New York Times reports on impending mass layoffs in China’s coal mines. The Longmay group, the biggest coal company in northeastern China, announced in September that it planned to lay off 100,000 workers — about 40% of its work force. It has delayed most of its layoffs, however, in an attempt to stave off unrest. Nonetheless, tensions are high: the number of strikes and labor protests nationwide this past year was twice as high as the previous year, and many of the protests have been met with intimidation, arrests, and detention. “When the full brunt of the layoffs comes,” one worker predicted, “the violence could be terrible.”